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Pay, Reference Points, and Police Performance

Listed author(s):
  • Alexandre Mas

Several theories suggest that pay raises below a reference point will reduce job performance. Final offer arbitration for police unions provides a unique opportunity to examine these theories, as the police officers either receive their requested wage or receive a lower one. In the months after New Jersey police officers lose in arbitration, arrest rates and average sentence length decline and crime reports rise relative to when they win. These declines are larger when the awarded wage is further from the police union's demand. The findings support the idea that considerations of fairness, disappointment, and, more generally, reference points affect workplace behavior.

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File URL: http://www.nber.org/papers/w12202.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12202.

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Date of creation: May 2006
Publication status: published as Mas, Alexandre. "Pay, Reference Points, And Police Performance," Quarterly Journal of Economics, 2006, v121(3,Aug), 783-821.
Handle: RePEc:nbr:nberwo:12202
Note: LS
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  1. Gibbons, Robert, 1988. "Learning in Equilibrium Models of Arbitration," American Economic Review, American Economic Association, vol. 78(5), pages 896-912, December.
  2. George A. Akerlof & Janet L. Yellen, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 255-283.
  3. Eric A. Verhoogen & Stephen V. Burks & Jeffrey P. Carpenter, 2007. "Fairness and Freight-Handlers: Local Labor Market Conditions and Wage-Fairness Perceptions in a Trucking Firm," ILR Review, Cornell University, ILR School, vol. 60(4), pages 477-498, July.
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  13. repec:fth:prinin:219 is not listed on IDEAS
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